AVIER ECERRA ICHAEL ARAH EBEKAH AMES ARRETT · “[W]here previously appropriated money is...
Transcript of AVIER ECERRA ICHAEL ARAH EBEKAH AMES ARRETT · “[W]here previously appropriated money is...
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Complaint for Declaratory and Injunctive Relief
XAVIER BECERRA Attorney General of California MICHAEL NEWMAN Senior Assistant Attorney General SARAH E. BELTON Supervising Deputy Attorney General REBEKAH A. FRETZ JAMES F. ZAHRADKA II GARRETT M. LINDSEY (SBN 293456) Deputy Attorneys General
300 South Spring Street, Suite 1702 Los Angeles, CA 90013 Telephone: (213) 269-6402 E-mail: [email protected]
Attorneys for Plaintiff State of California (List of other Plaintiffs’ counsel continued on next page)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
STATE OF MICHIGAN, STATE OF CALIFORNIA, DISTRICT OF COLUMBIA, STATE OF MAINE, STATE OF NEW MEXICO, and STATE OF WISCONSIN,
Plaintiffs,
v.
ELISABETH D. DEVOS, in her official capacity as the United States Secretary of Education, and UNITED STATES DEPARTMENT OF EDUCATION,
Defendants.
Civil Case No.
COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
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Complaint for Declaratory and Injunctive Relief
DANA NESSEL Attorney General of Michigan FADWA A. HAMMOUD Solicitor General TONI L. HARRIS NEIL GIOVANATTI Assistant Attorneys General Michigan Department of Attorney General P.O. Box 30758 Lansing, MI 48909 (517) 335-7603 [email protected] [email protected] [email protected] Attorneys for Plaintiff State of Michigan KARL A. RACINE Attorney General of the District of Columbia KATHLEEN KONOPKA Deputy Attorney General, Public Advocacy Division BRENDAN B. DOWNES NICOLE HILL Assistant Attorneys General, Public Advocacy Division Office of the Attorney General for the District of Columbia 441 4th St., N.W. Suite 630S Washington, DC 20001 (202) 724-6610 [email protected] Attorneys for Plaintiff District of Columbia AARON M. FREY Attorney General of Maine SARAH A. FORSTER Assistant Attorney General 6 State House Station Augusta, ME 04333-0006 (207) 626-8866 [email protected] Attorneys for Plaintiff State of Maine
HECTOR BALDERAS Attorney General of New Mexico P. CHOLLA KHOURY LISA GIANDOMENICO Assistant Attorneys General Consumer & Environmental Protection Division New Mexico Attorney General’s Office 201 Third Street NW, Suite 300 Albuquerque, NM 87102 (505) 717-3500 [email protected] [email protected] Attorneys for Plaintiff State of New Mexico JOSHUA L. KAUL Attorney General of Wisconsin HANNAH S. JURSS Assistant Attorney General Wisconsin Department of Justice Post Office Box 7857 Madison, WI 53707 (608) 266-8101 [email protected] Attorneys for Plaintiff State of Wisconsin
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INTRODUCTION
1. The State of Michigan, the State of California, the District of Columbia, the State of
Maine, the State of New Mexico, and the State of Wisconsin (collectively, the Plaintiffs, Plaintiff
States, or the States) bring this action to challenge a rule promulgated by Defendants Secretary
Elisabeth D. DeVos and the United States Department of Education (the Department)
(collectively, Defendants), unlawfully and erroneously interpreting the Coronavirus Aid, Relief,
and Economic Security Act (CARES Act), Public Law 116–136, 134 Stat. 281. The
Department’s interpretation will deprive low-income and at-risk students, their teachers, and the
public schools that serve them of critical resources to meet students’ educational and social-
emotional needs during and after pandemic-related school closures. The States will also be
harmed by the loss of these critical resources at a time of severe crisis.
2. The CARES Act was enacted on March 27, 2020, to address some of the financial
challenges faced by Americans as businesses closed, employees lost their jobs, and schools shut
down in an unprecedented effort to slow the spread of the virus. The statute authorizes the
allocation of $30.75 billion for elementary and secondary schools and higher education in
response to the COVID-19 pandemic, including assisting students to transition to distance
learning. The statute directs states to distribute CARES Act funds to local educational agencies
(LEAs) in proportion to their allocation under part A of Title I of the Elementary and Secondary
Education Act of 1965 (ESEA) in the previous fiscal year. Title I-A funds are allocated to LEAs
and schools based on the number of children who are economically disadvantaged. These funds
benefit many of the vulnerable students whom the States serve, including children with
disabilities, migrant children, English language learners, children in residential or day programs
for students in the foster care or juvenile justice systems, and homeless children.
3. Congress directed LEAs to use a portion of the funds they receive from the CARES
Act to provide equitable services to eligible private-school students and teachers in the same
manner as provided under Section 1117 of the ESEA. Under Section 1117, LEAs calculate the
amount of Title I-A funds reserved for equitable services based on the number of low-income
students who attend private schools as a percentage of the total number of low-income students in
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public and private schools combined. Once the money is apportioned, the LEA then provides
equitable services to private-school students who are academically at-risk.
4. Section 1117 is clear that LEAs are to use Title I-A funds to provide services to at-
risk private-school students, and neither Section 1117 nor the CARES Act requires the funds at
issue to be used to provide equitable services to all students enrolled in private schools. Yet,
despite these clear mandates and contrary to the will of Congress, the Department grafted its own
allocation and eligibility rules on Congress’s directive.
5. The Department first issued its interpretation of how LEAs should apportion the
CARES Act moneys and which private-school students were eligible for equitable services on
April 30, 2020, through a guidance document (Guidance Document).1 The Guidance
Document—which was inconsistent with prior guidance issued by the Department—provided that
LEAs must apportion funds for equitable services using the total numbers of private and public-
school students rather than only low-income students. If every LEA receiving CARES Act funds
in the Plaintiff States were required to apportion CARES Act funds in this manner, millions of
dollars in CARES Act funding would be diverted from their public schools to the private schools.
In addition, the Guidance Document directed LEAs to provide equitable services to all private-
school students, regardless of whether the private-school students were low income, were
academically at-risk of failing, or resided in Title I school attendance areas. Neither of these
mandates is consistent with Section 1117.
6. After widespread pushback regarding the Department’s incorrect and unlawful
guidance, the Department doubled-down on its erroneous interpretation of the CARES Act with
the publication of an interim final rule entitled Providing Equitable Services to Students and
Teachers in Non-public Schools, 85 Fed. Reg. 39,479 (July 1, 2020) (the Equitable Services Rule
or Rule).2 The Rule was published as an interim final rule, which is effective upon publication.
1 The Guidance Document is attached hereto as Exhibit A. The Department took down its
original Guidance Document from its website and now displays an updated version of the Guidance Document, which is available at https://oese.ed.gov/files/2020/06/Providing-Equitable-Services-under-the-CARES-Act-Programs-Update-6-25-2020.pdf.
2 The Rule is attached hereto as Exhibit B.
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7. Contrary to the Act, the Department’s Rule requires LEAs to make an untenable
choice about how to apportion the CARES Act funds for private-school students, a choice
unsupported by the relevant statutes: (1) follow the same interpretation contained in the Guidance
Document by apportioning funds for equitable services based on the number of all private school
children enrolled, rather than low-income private school children as required by Section 1117; or
(2) apportion funds for equitable services based on the number of low-income non-public school
children, as required under Section 1117, but then incur strict, poison-pill requirements found
nowhere in the CARES Act on how the public-school share of the funds can be used. Under
either option, all private-school students would still be eligible to receive equitable services,
which negates the eligibility requirements for services in Section 1117.
8. The first poison-pill “option” for LEAs prohibits them from using the public-school
share of the funds for any non-Title I schools. As a result, depending on the district, numerous
schools—which, despite not being designated as Title I schools, serve many low-income and at-
risk students—are excluded from receiving any funds. This restriction cannot square with the
flexibility Congress provided to LEAs to use the funds for all schools in their districts, not only
Title I schools. The second requirement cautions the LEAs from using the funds in a way that
would result in other federal funds “supplant[ing],” rather than “supplement[ing],” traditional
school funding from state and local sources. In effect, this second requirement prohibits many
LEAs from using CARES Act funds for existing expenditures, which is nonsensical since filling
the gap created by reduced state and local funding is a key purpose of the CARES Act funding.
These two poison pill restrictions on the use of the CARES Act funds penalize LEAs for
following the proportional share calculation in Section 1117 (and required by the CARES Act),
and push LEAs to apportion funds in accordance with the Department’s Guidance Document—
forcing LEAs to grant a higher proportion of funds to private schools, contrary to the CARES
Act’s clear mandate. They also undermine the flexibility that Congress intended to grant LEAs
when it enacted a broad set of permitted uses for CARES Act funds, which expressly include
maintaining continuity of services and continuing to employ existing staff of the local educational
agency. See CARES Act §§ 18002(c)(1), 18003(d)(12).
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9. The Rule is thus inconsistent with and not in accordance with the law. The
discrepancy between the plain language of the CARES Act and the Department’s inaccurate
interpretations has led to widespread confusion for State Education Agencies (SEAs), LEAs, and
private schools across the Nation. The Rule strips funds Congress specifically directed to public
schools to support their response to the COVID-19 pandemic and requires that those funds be
reallocated, including to affluent private schools, with consideration neither of the private
schools’ needs or available resources nor the harms these reallocations cause to public schools.
While Congress intended to provide some assistance to private-school students and teachers
through the inclusion of equitable services, it intended that assistance go to vulnerable students
and used the Title I-A formula and equitable services requirement applicable to those funds to
that end.
10. The CARES Act does not expressly delegate to the Department the authority to
promulgate administrative rules that interpret, let alone completely re-write, the Act’s allocation
requirements for moneys provided to private-school students. Nor does the Department’s general
rulemaking authority, see 20 U.S.C. § 1221e-3, allow it to impose these restrictions.
11. Because Congress unambiguously directed the allocation of money in accordance
with Title I-A, Congress neither explicitly nor implicitly left any gaps in the statute that might
justify rulemaking by the Department. The Department’s guidance and the Rule are accordingly
entitled to no deference.
12. The Rule is arbitrary and capricious in several respects.
13. First, as discussed above, the Department failed to articulate how its position
comports with the plain text of section 18005 of the CARES Act. Thus, it must be set aside as
based on an incorrect legal premise. See Safe Air for Everyone v. U.S. EPA, 488 F.3d 1088, 1101
(9th Cir. 2007).
14. Second, the Department failed to adequately explain—consistent with the evidence
before it—why it was reversing its own guidance regarding how equitable services under Section
1117 should be provided. See, e.g., Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 52 (1983) (requiring agencies to “explain the evidence which is
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available, and . . . offer a rational connection between the facts found and the choice made . . .
[including] justification for rescinding the regulation”); see also Dep’t of Homeland Sec. v.
Regents of the Univ. of Cal., No. 18-587, 2020 WL 3271746, at *14 (U.S. June 18, 2020)
(requiring “reasoned analysis to support” rescission of prior policy) (quoting State Farm, 463
U.S. at 42).
15. Third, the Department ignored important aspects of the problem, see State Farm, 463
U.S. at 43, including, among others, the harms to students, States, and LEAs discussed herein.
For example, the Department failed to consider that communities with Title I-eligible schools are
likely to experience a greater concentration of difficulties relating to COVID-19, and that
therefore Congress intended the flexible uses of the CARES Act funds to be concentrated in these
communities’ schools.
16. Fourth, the Department took into account factors Congress did not intend it to
consider. See id. For example, the Department’s prioritization of support for all private-school
students, even those not Title I-A eligible, appears to be based on the erroneous premise that
Congress intended to direct these funds to affluent, economically secure private-school students
on an equal basis as public schools that educate large populations of at-risk and low-income
students. Congress unambiguously expressed clear intent to the contrary by using the Title I-A
allocation method, which tracks low-income students.
17. Fifth, the Department failed to take into account the reliance interests that its former
position generated. The States and LEAs have relied on the Department’s prior interpretations,
and there is no indication that the Department took this into account when making its decision.
“When an agency changes course . . . it must be cognizant that longstanding policies may have
engendered serious reliance interests that must be taken into account. It would be arbitrary and
capricious to ignore such matters.” Regents, 2020 WL 3271746, at *14 (citations and punctuation
omitted).
18. Sixth, the Department’s ever-changing position has generated an “[u]nexplained
inconsistency,” and the Department has not shown any awareness of its changed position. Nat’l
Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 981 (2005).
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19. In addition, the Department flouted the procedural steps required under the
Administrative Procedure Act (APA) for the promulgation of the Rule, as the Department did not
have good cause for issuing the Rule as an interim final rule. 5 U.S.C. § 553(b)(B); see, e.g.,
California v. Azar, 911 F.3d 558, 576 (9th Cir. 2018) (“[A]n agency’s desire to eliminate more
quickly legal and regulatory uncertainty is not by itself good cause.”).
20. The Rule also violates core separation of powers principles in the Constitution.
“[W]here previously appropriated money is available for an agency to perform a statutorily
mandated activity,” separation of powers principles and the Spending Clause prevent agencies
from “ignor[ing] statutory mandates or prohibitions.” In re Aiken County, 725 F.3d 255, 260
(D.C. Cir. 2013); see also City & Cty. of San Francisco v. Trump, 897 F.3d 1225, 1232 (9th Cir.
2018) (agencies are without “[the] unilateral authority” to “thwart congressional will by canceling
appropriations passed by Congress”) (internal quotation marks and citations omitted). Congress
intended to deliver LEAs “need[ed] funding flexibility due to the disruption in the academic year
from COVID-19.” 166 Cong. Rec. H1856 (Mar. 27, 2020) (statement of Rep. Underwood).
Congress intended that LEAs have this funding to “help alleviate the challenges educators,
students and families are struggling with in light of school closures” particularly those “students
with disabilities, English language learners, and students experiencing homeless.” 166 Cong.
Rec. E340 (Mar. 31, 2020) (statement of Rep. Jayapal).
21. Relatedly, the Rule violates the Spending Clause: (1) it is contrary to Congress’s
plainly expressed intent in the CARES Act; (2) Congress has not “unambiguously” imposed the
requirements of the Rule, South Dakota v. Dole, 483 U.S. 203, 207 (1987) (internal citations
omitted, brackets in original); and (3) it is an improper “post acceptance” restriction on the States’
and LEAs’ use of the funds, Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 25 (1981).
22. Further, the additional funding requirements on schools that the Department would
impose under one of the so-called “choices” provided in the Rule violates the plain language of
the CARES Act requiring that funds be allocated in the same manner as required in Section 1117
of the ESEA and specifying that funds could be used to maintain existing operations and retain
existing personnel. The Department’s allocation scheme will dilute the per-pupil amount
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available to all public schools by directing Title I-A funds to support private-school students not
eligible for equitable services.
23. To avert irreparable injury to the Plaintiff States and the students, teachers, and
schools within their states, the Plaintiff States bring this suit to declare unlawful and enjoin the
Department’s Guidance Document and the Rule.
JURISDICTION AND VENUE
24. This action arises under the APA, 5 U.S.C. §§ 553, 701-06, and the U.S. Constitution.
This Court has subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1346.
25. This Court has the authority to issue declaratory relief, injunctive relief, and other
relief pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, and the APA, 5 U.S.C. §§
702, 705-06.
26. This is a civil action in which Defendants are agencies of the United States or officers
of such an agency. Venue is proper in this Court because a substantial part of the events giving
rise to this action occurred in this district. See 28 U.S.C. § 1391(e)(1).
PLAINTIFFS
27. Plaintiff State of Michigan is a sovereign state of the United States of America. This
action is being brought on behalf of the State by Attorney General Dana Nessel pursuant to her
statutory authority. Mich. Comp. Laws § 14.28.
28. Plaintiff State of California is a sovereign state of the United States of America. This
action is being brought on behalf of the State by California Attorney General Xavier Becerra, the
State’s chief law officer, Cal. Const., art. V, § 13, who has the duty to see that the laws of the
State are uniformly and adequately enforced, and Governor Gavin Newsom, the State’s chief
executive officer, who is responsible for overseeing the operations of the State and ensuring that
its laws are faithfully executed, Cal. Const., art. V, § 1.
29. Plaintiff District of Columbia is a sovereign municipal corporation organized under
the Constitution of the United States. It is empowered to sue and be sued, and it is the local
government for the territory constituting the permanent seat of the federal government. The
District is represented by and through its chief legal officer, the Attorney General for the District
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of Columbia, Karl A. Racine. The Attorney General has general charge and conduct of all legal
business of the District and all suits initiated by and against the District and is responsible for
upholding the public interest. D.C. Code § 1-301.81.
30. Plaintiff State of Maine is a sovereign state of the United States of America. The
Attorney General of Maine, Aaron M. Frey, is a constitutional officer with the authority to
represent the State of Maine in all matters and serves as its chief legal officer with general charge,
supervision, and direction of the State’s legal business. Me. Const. art. IX, § 11; Me. Rev. Stat.,
tit. 5, §§ 191 et seq. The Attorney General’s powers and duties include acting on behalf of the
State and the people of Maine in the federal courts on matters of public interest. The Attorney
General has the authority to file suit to challenge action by the federal government that threatens
the public interest and welfare of Maine residents as a matter of constitutional, statutory, and
common-law authority.
31. Plaintiff State of New Mexico is a sovereign state of the United States of America.
New Mexico is represented by its Attorney General, Hector Balderas, who is authorized to assert
the state’s interests in state and federal courts.
32. Plaintiff State of Wisconsin is a sovereign state of the United States of America and
brings this action by and through its Attorney General, Joshua L. Kaul, who is the chief legal
officer of the State of Wisconsin and has the authority to file civil actions to protect Wisconsin’s
rights and interests. See Wis. Stat. § 165.25(1m). The Attorney General’s powers and duties
include appearing for and representing the State, on the governor’s request, “in any court or
before any officer, any cause or matter, civil or criminal, in which the state or the people of this
state may be interested.” Id.
33. In filing this action, Plaintiff States seek to redress harms to their interests as
recipients of CARES Act emergency relief funding. Plaintiff States are affected by the
Department’s interpretation of the CARES Act through the Rule and Guidance Document, are
directly injured by them, and the relief requested will redress their injuries.
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DEFENDANTS
34. Defendant Elisabeth D. DeVos is Secretary of the United States Department of
Education and is sued in her official capacity pursuant to 5 U.S.C. § 702. Her principal address is
400 Maryland Avenue, S.W., Washington, D.C. 20202.
35. Defendant the United States Department of Education is an executive agency of the
United States of America pursuant to 5 U.S.C. § 101, and a federal agency within the meaning of
28 U.S.C. § 2671. As such, it engages in agency action and is named as a defendant in this action
pursuant to 5 U.S.C. § 702. Its principal address is 400 Maryland Avenue, S.W., Washington,
D.C. 20202.
36. Secretary DeVos is responsible for carrying out the duties of the Department of
Education under the Constitution of the United States of America and relevant statutes, including
the CARES Act and the ESEA.
FACTUAL ALLEGATIONS
I. COVID-19 PANDEMIC
37. COVID-19 is a public health emergency that has caused and continues to have
devastating impacts on countless individuals, families, communities, businesses, and
governments. Our Nation’s educational agencies and school systems have had to respond
urgently to the crisis and take drastic measures to protect the health and safety of their students
and staff.
38. The Plaintiff States’ educational agencies and school districts have been forced to
transition to remote delivery of instruction, implement new health and safety guidelines, and meet
the novel and challenging needs of their students arising from the pandemic, including supports
for their vulnerable populations beyond the provision of core educational services. These efforts
include, but are not limited to, serving meals to qualifying students and families; providing
special education and related services to students with disabilities remotely; enabling English
learners and migrant students to access remote learning by providing accessible technology,
online instruction and translations; and offering computing devices and connectivity to low-
income students at no cost.
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39. Compounding the programmatic challenges in serving students during the pandemic
is the uncertainty and economic stress caused by COVID-19 on the Plaintiff States, their SEAs,
and their LEAs. Public education largely depends on state funding. State budgets have been hit
hard by dramatic reductions in revenues from state sales and income taxes caused by the COVID-
19 pandemic, as well as increased expenditures necessary for the public health response. This
revenue decline inevitably impacts the amount of state aid available to school districts. And yet,
school districts have incurred and continue to incur significant costs related to the pandemic,
including paying for deep-cleaning campuses, obtaining personal protective equipment for
employees, purchasing distance learning materials as well as new software and hardware, and
preparing and delivering meals to students and families.
II. THE CARES ACT
40. In late March 2020, the United States Congress acted to address the fiscal impact of
the COVID-19 outbreak. It passed legislation, signed by the President, including appropriations
to federal agencies with explicit direction for distributing the funding.
41. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. No.
116–136, 134 Stat. 281, enacted on March 27, 2020, appropriated funds for K-12 and higher
education in response to the economic impact of the COVID-19 pandemic.
42. Specifically, Congress created the Education Stabilization Fund to help educational
entities across the country “prevent, prepare for, and respond to coronavirus,” and appropriated
$30.75 billion for the Fund. CARES Act § 18001.
43. Congress tasked the Department with allocating the moneys appropriated to the
Education Stabilization Fund through the CARES Act. The vast majority of the moneys in the
Education Stabilization Fund are divided into three separate funds, each with its own rules for
distribution and use: the Governor’s Emergency Education Relief Fund (GEER), the Elementary
and Secondary School Emergency Relief Fund (ESSER), and the Higher Education Emergency
Relief Fund. Id. §§ 18002-18004. The funds are allocated as follows: 9.8% for GEER; 43.9% for
ESSER; and 46.3% for the Higher Education Emergency Relief Fund. Id. §§ 18001(b)(1)-(3).
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44. According to the Department’s website, $2,953,230,000 was allocated for the GEER
Fund and $13,229,265,000 for the ESSER Fund.3
A. The Governor’s Emergency Education Relief (GEER) Fund
45. The CARES Act directs the Department to provide emergency grants from the GEER
Fund to state governors. CARES Act § 18002(a).
46. The Department must allocate the GEER Fund moneys to governors as follows: (1)
60% based on the “relative population of individuals aged 5 through 24” in each state, and (2)
40% based on the state’s “relative number of children counted under section 1124(c) of the
[ESEA].” Id. § 18002(b). Section 1124(c) of the ESEA describes the children to be counted for
purposes of distributing funds under Part A, Title I of the ESEA, commonly referred to as Title I-
A funds. Children to be counted in this section include children 5 to 17 who are “from families
below the poverty level,” “in institutions for neglected and delinquent children . . . or being
supported in foster homes with public funds,” and “from families above the poverty level” but
who receive payments under the Social Security Act, Title IV, Part A (Temporary Assistance for
Needy Families). 20 U.S.C. §§ 6333(c)(1)(A)-(C), (c)(4)(A).
47. Governors, along with SEAs, may use GEER funds for three purposes:
(1) To provide emergency support through grants to local educational agencies that the State educational agency deems have been most significantly impacted by coronavirus to support the ability of such local educational agencies to continue to provide educational services to their students and to support the on-going functionality of the local educational agency;
(2) To provide emergency support through grants to institutions of higher education serving students within the State that the Governor determines have been most significantly impacted by coronavirus to support the ability of such institutions to continue to provide educational services and support the ongoing functionality of the institution; and
(3) To provide support to any other institution of higher education, local educational agency, or education-related entity within the State that the Governor deems essential for carrying out emergency educational services to students for authorized activities . . . the provision of child care and early childhood education, social and emotional support, and the protection of education-related jobs.
3 U.S. Dep’t of Educ., Governor’s Emergency Education Relief Fund, State Allocation
Table, available at https://oese.ed.gov/files/2020/04/GEER-Fund-State-Allocations-Table.pdf; U.S. Dep’t of Educ., Elementary and Secondary School Emergency Relief Fund, State Allocation Table, available at https://oese.ed.gov/files/2020/04/ESSER-Fund-State-Allocations-Table.pdf.
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CARES Act §§ 18002(c)(1)-(3).
48. While they are directed per the above criteria to focus the GEER funds on the most
significantly impacted districts, governors may allocate moneys from the GEER Fund to any
LEA, regardless of whether the LEA or its public schools receive Title I-A funds. Moreover,
there are no federal restrictions on the use of funds by the LEAs and any other restrictions on the
use of funds is left to the discretion of each state. The CARES Act provides broad flexibility to
the LEAs to use the moneys “to provide educational services to their students and to support the
on-going functionality of the local educational agency.” Id. §§ 18002(c)(1), (3).
49. The Plaintiff States expect to receive the following amounts from the GEER Fund:4
a. Michigan: $89,432,673;
b. California: $355,227,235;
c. District of Columbia: $5,807,678;
d. Maine: $9,273,552;
e. New Mexico: $22,262,663; and
f. Wisconsin: $46,550,411.
B. Elementary and Secondary School Emergency Relief (ESSER) Fund
50. Through the CARES Act, Congress also directed the Department to provide
emergency grants from the ESSER Fund to SEAs. CARES Act § 18003(a).
51. The Department is required to allocate the ESSER Fund moneys to SEAs “in the
same proportion as each State received under [Title I-A] in the most recent fiscal year.” Id. §
18003(b). Allocation of Title I-A funds to States is governed by the formulas included in 20
U.S.C. §§ 6332-39, and is based primarily on the numbers of children from low-income families
and foster children in each state’s LEAs.
52. The CARES Act requires at least 90 percent of the moneys received by the SEAs
from the ESSER Fund to be sub-granted to LEAs within the state. Id. § 18003(c). Like the
Department’s allocation to the states, the SEAs are to sub-grant the funds to LEAs “in proportion
4 U.S. Dep’t of Educ., Governor’s Emergency Education Relief Fund, State Allocation
Table, available at https://oese.ed.gov/files/2020/04/GEER-Fund-State-Allocations-Table.pdf.
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to the amount of funds such local educational agencies and charter schools that are local
educational agencies received under [Title I-A] in the most recent fiscal year.” Id.
53. The Department’s May 8, 2020 guidance discussing the ESSER allocations and
LEAs’ eligibility acknowledged that LEAs are only eligible for the ESSER funding to the extent
they participate in the Title I-A program.5 In other words, moneys from the ESSER Fund are
designated, through the SEAs, for LEAs that receive Title I-A funds, which in turn support those
public schools with populations of economically-disadvantaged children in each state. LEAs that
do not receive Title I-A funds (generally, LEAs without significant numbers of low-income
students) are not eligible for the ESSER Funds.
54. LEAs may use the moneys from the ESSER Fund for twelve broad purposes, as
described in the CARES Act. See CARES Act § 18003(d). Like the GEER Fund, there are no
restrictions in the statutory language on which schools within the eligible LEAs may receive the
funds, regardless of whether the public school receives Title I-A funds. These funds can be used
for expressly broad purposes, including “[o]ther activities that are necessary to maintain the
operation of and continuity of services in [LEAs] and continuing to employ existing staff of the
[LEA],” i.e., to support any operation, service, or staff existing prior to the pandemic. Id. §
18003(d)(12).
55. For the SEAs to receive the ESSER funds from the Department, the Plaintiff States’
SEAs were required to complete and submit a Certification and Agreement form.6
56. Within the Certification and Agreement form, the Plaintiff SEAs are required to:
[A]cknowledge and agree that the failure to comply with all Assurances and Certifications in this Agreement, all relevant provisions and requirements of the CARES Act, Pub. L. No. 116-136 (March 27, 2020), or any other applicable law or regulation may result in liability under the False Claims Act, 31 U.S.C. § 3729, et seq.; OMB Guidelines to Agencies on Governmentwide Debarment and Suspension
5 U.S. Dep’t of Educ., Frequently Asked Questions about the Elementary and Secondary
School Emergency Relief Fund (ESSER), May 5, 2020, available at https://oese.ed.gov/files/2020/05/ESSER-Fund-Frequently-Asked-Questions.pdf.
6 U.S. Dep’t of Educ., Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund), CFDA Number 84.425D, April 24, 2020, available at https://oese.ed.gov/files/2020/04/ESSERF-Certification-and-Agreement-2.pdf.
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(Nonprocurement) in 2 CFR part 180, as adopted and amended as regulations of the Department in 2 CFR part 3485; and 18 USC § 1001, as appropriate.
Certification and Agreement at 1.
57. Within the specific assurances and certifications, the SEAs are required to ensure
that:
[] LEAs receiving ESSER funds will provide equitable services to students and teachers in non-public schools as required under 18005 of Division B of the CARES Act.
[] [A]n LEA receiving ESSER funds will provide equitable services to students and teachers in non-public schools located within the LEA in the same manner as provided under section 1117 of the ESEA, as determined through timely and meaningful consultation with representatives of non-public schools.
Id. at 2.
58. Each of the Plaintiff States’ SEAs submitted a Certification and Agreement to the
Department to secure the ESSER Funds for their states.
59. The Department also requires SEAs to submit quarterly reporting regarding how the
SEA and the LEAs used the ESSER funds. Id. at 3; see also CARES Act § 15011(b)(2).
60. From the ESSER Fund, the Plaintiff States each received the following amounts:7
a. Michigan: $389,796,984;
b. California: $1,647,306,127;
c. District of Columbia: $42,006,354;
d. Maine: $43,793,319;
e. New Mexico: $108,574,786; and
f. Wisconsin: $174,777,774.
C. Equitable Services for Private-School Students and Teachers Required by the CARES Act.
61. The CARES Act requires that LEAs that receive moneys from the GEER Fund and/or
ESSER Fund must allocate some of the moneys to provide “equitable services” to students and
teachers at private schools. CARES Act § 18005(a). Crucial to this action, the CARES Act
7 U.S. Dep’t of Educ., Elementary and Secondary School Emergency Relief Fund, State
Allocation Table, available at https://oese.ed.gov/files/2020/04/ESSER-Fund-State-Allocations-Table.pdf.
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specifies that each LEA “shall provide equitable services in the same manner as provided under
Section 1117 of the ESEA of 1965 to students and teachers in non-public schools.” Id. (emphasis
added).
62. Section 1117 of the ESEA, 20 U.S.C. § 6320, requires LEAs to allocate a portion of
their Title I-A funds to provide equitable services to eligible students and teachers at private
schools. Section 1117 calculates the proportionate share of funds to be used for equitable
services “based on the number of children from low-income families who attend private schools”
and reside in the “participating school attendance areas” (i.e., the geographic area in which
children are normally served by a Title I-A school). 20 U.S.C. § 6320(a)(4)(A); see also 20
U.S.C. § 6313(a)(2) (defining “school attendance area”). Services are then provided to those
private-school students identified “as failing, or most at risk of failing, to meet State academic
standards.” 20 U.S.C. § 6320(a) (incorporating the definition of “eligible children” from 20
U.S.C. § 6315(c)). In other words, the LEAs must provide equitable services only to low-
achieving children who attend private schools and reside in a Title I-A school attendance area.
Id. §§ 6315(c), 6320(a).
63. The Department’s Title I-A guidance for providing equitable services under Section
1117 to private-school students—issued under the current administration less than a year ago—
confirms that equitable services should only be provided to at-risk students who reside in Title I
public school attendance areas. As stated in that document: “to be eligible for Title I services, a
private school child must reside in a participating Title I public school attendance area and must
be identified by the LEA as low achieving on the basis of multiple, educationally related,
objective criteria.”8
64. While services are based on low-achievement and residence in a Title I-A school
attendance area, the amount of money LEAs are required to set-aside under Section 1117 of the
8 U.S. Dep’t of Educ., Title I, Part A of the Elementary and Secondary Education Act of
1965, as amended by the Every Student Succeeds Act: Providing Equitable Services to Eligible Private School Children, Teachers, and Families Updated Non-Regulatory Guidance, October 7, 2019, p. 30, available at https://www2.ed.gov/about/inits/ed/non-public-education/files/equitable-services-guidance-100419.pdf.
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ESEA is based on the number of economically disadvantaged students attending private schools
who reside in the LEA’s attendance area. 20 U.S.C. § 6320(c).
65. Again, it has been the Department’s own position that, under Section 1117 of the
ESEA, funding for equitable services should be based on the number of children in private
schools who are economically disadvantaged or in foster care—the LEAs should “determine an
accurate count of children from low-income families who attend public and private schools and
reside in participating Title I public school attendance areas in order to allocate the proportional
share.”9
66. Notably, the CARES Act does not require that LEAs provide equitable services in the
same manner as Section 8501 of the ESEA, a general provision that measures equitable services
based on proportional total enrollments. 20 U.S.C. § 7881(b). Rather, the CARES Act
specifically references Section 1117. By referencing Section 1117, Congress explicitly and
clearly directed LEAs to provide equitable services only based on the number of low-income
private-school students, not all private-school students, as would have been required had the
CARES Act instead referenced Section 8501.
III. THE DEPARTMENT’S APRIL 30, 2020 GUIDANCE DOCUMENT
67. On April 30, 2020, the Department issued the Guidance Document, titled Providing
Equitable Services to Students and Teachers in Non-Public Schools Under the CARES Act
Programs. See Guidance Document, Ex. A.
68. The Guidance Document advises LEAs to (i) determine the allocation of funds for
equitable services based on all students enrolled in non-public schools, rather than only
economically disadvantaged students, and (ii) ignore Section 1117’s eligibility requirements for
private-school students to receive services, including residence in a Title I-A school attendance
area and low-achievement.
9 Id. at 19.
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A. Determining the Proportional Share of Funds to Be Reserved for Equitable Services
69. In section 10 of the Guidance Document, the Department incorrectly states that an
LEA must calculate the proportional share available for equitable services from the comparative
enrollments of all students in public and private schools in the district, rather than the
comparative enrollments of low-income students, as required by Section 1117(a)(4)(A)(i).
Guidance Document, Ex. A at 6-7; see also 20 U.S.C. § 6320(a)(4)(A)(i).
70. Essentially, the guidance rejects the calculation of the proportionate share under
Section 1117 that Congress specified in the CARES Act and instead adopts the calculation in
Section 8501, which drastically inflates the amount of CARES Act funds required to be allocated
for services for private-school students.
71. Under the Department’s Guidance Document, the share of funds diverted from public
schools to private schools in many LEAs is substantial.
B. Eligibility Requirements for Private-School Students to Receive CARES Act Equitable Services
72. In section 9 of the Guidance Document, the Department erroneously determines that
“[a]ll students and teachers in a non-public school are eligible for equitable services under the
CARES Act programs.” Guidance Document, Ex. A at 5.
73. The Department cites no section of the CARES Act that requires—or even suggests—
that all students and teachers at non-public schools are eligible for equitable services.
74. The plain language of the CARES Act makes clear that LEAs that receive GEER or
ESSER funds must provide equitable services “in the same manner as provided under section
1117 of the ESEA.” CARES Act § 18005(a) (emphasis added). And Section 1117 of the ESEA
requires LEAs to provide equitable services for eligible, at-risk children enrolled in non-public
schools who reside in attendance areas where public schools qualify for Title I-A funding, rather
than all students enrolled. 20 U.S.C. § 6320(a)(1).
75. Section 7 of the Guidance Document misinterprets the requirement under § 18005(a)
of the CARES Act that equitable services be provided “in the same manner as provided under
section 1117 of the ESEA.” See Guidance Document, Ex. A at 3-5. Contrary to the Act, this
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section of the Guidance Document states that this requirement in the CARES Act “necessitates
that the Department interpret how the requirements of section 1117 apply to the CARES Act
programs” because “an LEA under the CARES Act programs may serve all non-public-school
students and teachers without regard to family income, residency, or eligibility based on low
achievement.” Id. at 3. But Section 18005(a) of the CARES Act does not necessitate any
interpretation by the Department. Instead, the plain language of the Act makes clear that, while
LEAs have discretion in spending money for public schools, Congress intended that the LEAs
should provide equitable services to private schools under the CARES Act “in the same manner”
as they do for at-risk students under Title I-A.
76. Also, in section 7 of the Guidance Document, the Department purports to
“reconcile[]” various subsections of Section 1117 of the ESEA using an erroneous and
incongruous interpretation of the Act. Guidance Document, Ex. A at 3. For example, after noting
that Section 1117(a)(1) of the ESEA requires LEAs to “provide equitable services to low-
achieving students,” the Department nevertheless states that “an LEA may provide equitable
services . . . to any students and teachers in non-public schools.” Id. The Department provides no
explanation or basis for this distinction.
77. The Guidance Document’s conclusion that the non-public proportion must be
calculated based on total enrollments, rather than enrollment of low-income students, and its
interpretation of the requirements for equitable services under § 18005(a) of the CARES Act are
arbitrary and capricious, misstate and misapply the law as written, and exceed the Department’s
authority.
C. Reaction to the Department’s Guidance Document
78. The Guidance Document faced immediate backlash by Congressional leaders, SEAs,
and national education groups due to its incorrect interpretation of the CARES Act.
79. On May 5, 2020, the Council of Chief State School Officers (CCSSO), a nationwide
organization of public officials who head SEAs, wrote a letter to urge Secretary DeVos to clarify
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the Guidance Document to align it with the CARES Act’s requirements for equitable services.10
The CCSSO’s letter specifically requested that the Department issue new guidance to “advise
LEAs to look at the percentage of FY2019 Title I-A funds they set aside for equitable services
and apply that percentage to ESSER Funds.”11 Secretary DeVos responded to CCSSO’s letter on
May 22, 2020, rejecting its request to clarify the Guidance Document in accordance with the plain
text of the CARES Act.12 Secretary DeVos stated that if LEAs “insist on acting contrary to the
Department’s stated position, they should, at a minimum, put into an escrow account the
difference between the amount generated by the proportional-student enrollment formula and the
Title I, Part A formula.”13 The instruction to put funds in escrow is nonsensical given the crisis,
and clearly inconsistent with the intent of the CARES Act, which is to provide funding
expeditiously to LEAs to address their immediate needs in light of the COVID-19 pandemic.
80. Additionally, multiple SEAs published memoranda and guidance to their LEAs
instructing the LEAs to follow the plain text of the CARES Act and not the Department’s
Guidance Document.14 For example, on May 12, 2020, the Indiana Department of Education
published a memorandum for its LEAs, instructing the LEAs to disregard the Department’s
10 Letter from Carissa Moffat Miller, CCSSO, to Betsy DeVos, U.S. Sec’y of Educ., (May 5, 2020), available at https://ccsso.org/sites/default/files/2020-05/DeVosESLetter050520.pdf.
11 Id. 12 Letter from Betsy DeVos, U.S. Sec’y of Educ., to Carissa Moffat Miller, CCSSO (May
22, 2020), available at https://ccsso.org/sites/default/files/2020-06/Secretary%20DeVos%20Response%20to%20Carrisa%20Moffat%20Miller%205%2022%2020.pdf.
13 Id. 14 See, e.g., Pennsylvania Department of Education, Letter from Pedro Rivera, Sec’y of
Educ., to Frank Brogan, Asst. Sec’y. for Elementary and Secondary Educ., (May 7, 2020), available at https://www.education.pa.gov/Documents/K-12/Safe%20Schools/COVID/CARESAct/Letter%20to%20Secretary%20Brogan.pdf; Memorandum from New Mexico Public Education Department, Funds available under Coronavirus Aid, Relief and Economic Security (CARES) Act through the Elementary and Secondary School Education Relief Fund (ESSER), Index 24301 (May 14, 2020), available at https://webnew.ped.state.nm.us/wp-content/uploads/2020/05/CARES-Act-memo-ESSER-Funds-2020-05-14-Final.pdf; Mississippi Department of Education, CARES Act Equitable Service, EdUpdate (May 21, 2020), available at https://msachieves.mdek12.org/cares-act-equitable-services/; Maine Department of Education, Priority Notice, CARES Act: Frequently Asked Questions (May 27, 2020), available at https://mailchi.mp/maine/cu5lemq6y0-1321452; Memorandum from Illinois State Board of Education (March 31, 2020), available at https://www.isbe.net/Documents/CARES-Act-District-Info-3-31-20.pdf; Memorandum from Connecticut State Board of Education, (June 8, 2020), available at https://portal.ct.gov/-/media/SDE/Digest/2019-20/Equitable-services-under-ESSERF-CARES-Act-06082020.pdf.
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Guidance Document and “enact[] the CARES Act as written in the law . . . including the
provision to administer equitable services according to Sec. 1117 of the [ESEA].”15 The
memorandum described its decision as “ensur[ing] the funds are distributed according to
Congressional intent and a plain reading of the law, which prioritizes communities and schools
with high-poverty who are at most risk and in need of additional funds.”16
81. On May 20, 2020, Chairman Bobby Scott of the House Committee on Education and
Labor; Chairwoman Rosa DeLauro of the House Subcommittee on Labor, Health, Human
Services, and Related Agencies; and Ranking Member Patty Murray of the Senate Committee on
Health, Education, Labor, and Pensions wrote to Secretary DeVos, to urge the Department to
“immediately revise your April 30 guidance, including Question 10 of the guidance document to
come into compliance with the CARES Act and section 1117 of ESEA.”17 The bicameral letter
also requested the Department’s internal records related to the development of “its interpretation
of the equitable services provision and its inconsistency with long-standing requirements related
to equitable services.”18
82. On May 21, 2020, Senator Lamar Alexander, Chair of the Senate Committee on
Health, Education, Labor, and Pensions, was quoted as disagreeing with the Department’s
Guidance Document: “My sense was that the money should have been distributed in the same
way we distributed Title I money. . . . I think that’s what most of Congress was expecting.”19
83. On June 4, 2020, fifty national education organizations, including the CCSSO, wrote
to United States Senate and House leaders, asking for Congress to “pass[] legislation rescinding
15 Memorandum from Indiana Department of Education, Final Language for Equitable
Share of CARES Act Funds (May 12, 2020), available at https://www.doe.in.gov/sites/default/files/news/final-language-equitable-share-cares-act-funds.pdf.
16 Id. 17 Letter from Robert C. “Bobby” Scott, Chair, Committee on Education and Labor, U.S.
House of Representatives, et al., to Betsy DeVos, U.S. Sec’y of Educ. (May 20, 2020), available at https://edlabor.house.gov/imo/media/doc/2020-5-20%20Ltr%20to%20DeVos%20re%20Equitable%20Services.pdf.
18 Id. 19 Nicole Gaudiano, Alexander, DeVos split on stimulus support for private school kids,
Politico, May 22, 2020, available at https://www.politico.com/newsletters/morning-education/2020/05/22/alexander-devos-split-on-stimulus-support-for-private-school-kids-787837.
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the equitable services [G]uidance [Document], preempting any future notice from [the
Department] that is contrary to the legislation, and further clarifying the allocation requirements
for equitable services for nonpublic schools consistent with Title I.”20
IV. THE RULE
84. On June 25, 2020, the Department published an unofficial version of the Rule on its
website. The Rule was officially published in the Federal Register on July 1, 2020. 85 Fed. Reg.
39,479.
85. The Rule was published as an interim final rule and became effective when published.
A. The Rule Conflicts with the Plain Language of the CARES Act.
86. Like the Department’s Guidance Document, the Rule effectively rewrites both (1) the
proportional share calculation that Congress established for LEAs to determine the amount of
funds to be used for equitable services for private-school students, and (2) the eligibility criteria
that Congress mandated to determine which private-school students are entitled to equitable
services under the CARES Act.
87. Neither the proportional share nor eligibility mandates in the Rule comport with the
plain text of the CARES Act.
88. The Rule will divert millions of dollars to private schools and away from public
schools in direct contradiction of Congress’s intent.
89. For the proportional share calculation, the Rule provides two options to LEAs:
Option #1 (Title I-Only Schools Option): An LEA using all its funds under a CARES Act program to serve only students and teachers in public schools participating under Title I, Part A of the ESEA may calculate the proportional share in accordance with paragraph (c)(1)(ii) of this section or by using—
(A) The proportional share of Title I, Part A funds it calculated under section 1117(a)(4)(A) of the ESEA for the 2019-2020 school year; or
(B) The number of children, ages 5 through 17, who attend each non-public school in the LEA that will participate under a CARES Act program and are from low-income families compared to the total number of children, ages 5 through 17, who are from
20 Letter from national education organizations to congressional leadership (June 4, 2020),
available at https://ccsso.org/sites/default/files/2020-06/Equitable%20Services%20Funding%20Letter%20-%20FINAL.pdf.
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low-income families in both Title I schools and participating non-public elementary and secondary schools in the LEA.
34 C.F.R. § 76.665(c)(1)(i).
90. Functionally, this option is most similar to the ESEA, Section 1117 proportional share
calculation. See 20 U.S.C. § 6320(a)(4)(A); see also id. § 6320(c)(1). The two sub-options allow
the LEA to use the proportional share figures used for the 2019-2020 Title I-A distribution (34
C.F.R. § 76.665(c)(1)(i)(A)) or updated figures based on the current proportion of low-income
students who attend private schools in the LEA (34 C.F.R. § 76.665(c)(1)(i)(B)). By adopting the
ESEA, Section 1117 proportional share calculation, Option #1 similarly adopts the proportional
share calculation required by the CARES Act, as the funds would then be apportioned “in the
same manner” as Section 1117. See CARES Act § 18005(a). However, this option includes two
unsupported “poison pill” limitations on LEAs who choose this option, as discussed below.
Option #2 (Private School Enrollment Option): Any other LEA must calculate the proportional share based on enrollment in participating non-public elementary and secondary schools in the LEA compared to the total enrollment in both public and participating non-public elementary and secondary schools in the LEA.
34 C.F.R. § 76.665(c)(1)(ii).
91. This option incorporates the Department’s erroneous proportional share calculation
set forth in the Guidance Document, requiring LEAs to consider all private-school students when
they apportion funds, similar to the calculation used to determine funds for equitable services
under Section 8501 of the ESEA, which Congress did not adopt for CARES Act funds. See 34
C.F.R. § 76.665(c)(1)(ii). This option has no basis in the CARES Act and would allow the
Department to divert hundreds of millions of dollars of CARES Act funds intended for public
schools to private schools.
92. As mentioned above, the Department included two poison pill requirements for using
Option #1 (Title I-Only Schools Option) to calculate the proportional share, with the obvious
effect of pushing LEAs to use Option #2.
93. The poison pill restrictions would force the LEAs using Option #1 to calculate the
proportional share to (1) use the CARES Act funds reserved for public schools for Title I schools
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only, and (2) use the CARES Act only for limited, supplemental costs to avoid a Title I
supplanting violation. 34 C.F.R. §§ 76.665(c)(1), (c)(3); 20 U.S.C. § 6321(b)(1) (Section 1118 of
ESEA). This would effectively prohibit many LEAs from using CARES Act funds, for example,
to retain existing staff in Title I schools while using state and local dollars for the same purpose in
non-Title I schools. This requires LEAs to treat CARES Act funds not as stimulus monies but as
additional funds, forcing them to choose between a less beneficial methodology or a requirement
that limits their ability to spend CARES Act dollars to most effectively meet their needs.
94. Neither of these restrictions is found anywhere in the CARES Act. Rather, they are
both contrivances of the Department, seemingly intended to force LEAs to use Option #2 for
apportioning the CARES Act funds. The restrictions effectively punish LEAs that attempt to
apportion the CARES Act funds as Congress intended.
95. The Department has acknowledged “Congress . . . intended that grantees have
substantial flexibility in the use of these [CARES Act] dollars.”21 Yet, the Department arbitrarily
imposes these restrictions on LEAs, significantly limiting their flexibility to use the funds.
96. These poison pill requirements are contradicted by the plain language of the CARES
Act, which specifies how the public schools’ share of the funds should be used.
97. The CARES Act grants LEAs that receive CARES Act funds flexibility to use the
funds for all schools in the district, not only Title I schools. See CARES Act §§ 18002(c)(1), (3),
18003(d)(1)-(12).
98. For the ESSER funds, the CARES Act specifies the twelve “[u]ses of [f]unds” for the
LEAs, including such broad uses as “[p]roviding principals and other school leaders with the
resources necessary to address the needs of their individual schools” and “[o]ther activities that
are necessary to maintain the operation of and continuity of services in [LEAs] and continuing to
employ existing staff of the [LEA].” CARES Act §§ 18003(d)(3), (12); see also id. §§
18003(d)(1)-(12). Likewise, LEAs can broadly use the GEER funds granted to LEAs at the
21 Letter from Mitchell M. Zais, Ph.D., Deputy Sec’y, U.S. Dep’t of Educ. to Gene Dodaro, Comptroller Gen., U.S. Gov’t Accountability Office (June 12, 2020), at p. 3 (available as pp. 375-389 of the U.S. Gov’t Accountability Office, COVID-19 Opportunities to Improve Federal Response and Recovery Efforts, GAO-20-625, June 2020, available at https://www.gao.gov/products/GAO-20-659T).
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Governor’s discretion “to continue to provide educational services to their students and support
on-going functionality of the [LEA].” Id. § 18002(c)(1); see also id. § 18002(c)(3). These broad
uses of the ESSER and GEER funds as specified by Congress explicitly allow the LEAs and
public schools to use the funds to “supplant” state and local funding that may have been lost due
to the pandemic. The Rule impermissibly exceeds the scope of the CARES Act by requiring
LEAs to choose between two options that are contrary to the CARES Act’s requirements and
prohibiting LEAs from using funds consistent with those purposes if they use Option #1.
99. Whether calculated under Option #1 (Title I-only schools Option) or Option #2
(Private school enrollment Option), CARES Act funds will be diverted from their intended
recipients.
100. Under Option #1, due to the poison pill restrictions, public-school students at non-
Title I schools (many of whom are low-income or otherwise at-risk) will receive no funding
whatsoever. The ESSER funds and part of the GEER funds were specifically designed to assist
all public schools in LEAs that receive CARES Act funds—not just the Title I schools within
these LEAs. And, even for the public-school students at Title I schools, the funds could only be
used for supplemental costs or else risk a Title I supplanting violation. Thus, the LEA would be
prohibited from using the CARES Act funds for general educational expenses in Title I schools,
such as teacher salaries, books, or general sanitation, among other uses. This erroneous
restriction is directly contradicted by many of the listed “Uses of Funds” for moneys from the
ESSER Fund in the CARES Act. See CARES Act §§ 18003(d)(2)-(11). In addition, at-risk
private-school students, who are eligible for equitable services under Section 1117, will receive
fewer funds per student, and the funds reserved for private-school students will be used to provide
services for all private-school students (both at-risk and not at-risk), diluting funding that
Congress intended for vulnerable students.
101. Under Option #2, private-school students will receive a significantly greater
proportion of the funds than they are entitled to under the CARES Act, as all private-school
students will be considered when apportioning the funds. In turn, public schools will lose funding
diverted to the private schools. In addition, the money set aside for private-school students will
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be used to provide services to all private-school students, reducing the amount of money per
student for the at-risk private-school students who are eligible for services under Section 1117.
102. Under either proportional share option, the Rule—like the Guidance Document—
requires LEAs to provide equitable services to all private-school students. 34 C.F.R. §
76.665(d)(2). This requirement does not comport with the plain text of the CARES Act, which
adopts the Section 1117 eligibility requirements, limiting equitable services to at-risk private-
school students. See CARES Act § 18005(a); 20 U.S.C. § 6320(a) (incorporating the definition of
“eligible children” from 20 U.S.C. § 6315(c)).
B. The Department Lacks Authority to Issue the Rule and Failed to Follow the Procedural Requirements of the APA.
103. The Rule cites 20 U.S.C. § 1221e-3 and 20 U.S.C. § 3474 as authority for rulemaking
related to the CARES Act. Neither of these statutes authorizes the Department to issue the Rule.
104. Congress gave no authority to the Department to issue rules interpreting the CARES
Act either generally, with regard to the GEER and ESSER Funds, or in particular to the
distribution of appropriated funds for equitable services for private-school students.
105. Nor did Congress authorize the Department to issue rules related to the provision of
equitable services for private-school students without compliance with the notice and comment
procedures of the APA.
106. The Department issued the Rule as an interim final rule without demonstrating good
cause that the notice and public procedures were impracticable, unnecessary, or contrary to the
public interest.
107. Because the Department cannot satisfy the requirements for issuing the Rule as an
interim final rule, the Rule does not comply with the Administrative Procedure Act’s procedural
requirements.
V. THE RULE WILL CAUSE IMMEDIATE AND IRREPARABLE HARM TO PLAINTIFF STATES, SCHOOLS, AND STUDENTS.
108. The Rule and Guidance Document will cause immediate, irreparable harm to the
interests of the States, LEAs, and the vulnerable students whom Congress meant to assist through
the CARES Act.
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109. Plaintiff States, themselves and through their publicly administered educational
institutions, are directly regulated by the Rule and will suffer direct harm because of the Rule.
110. Each of the Plaintiff States is constitutionally required to administer a system of K-12
public education funded primarily by state moneys:
a. Michigan: The Michigan Constitution charges the Michigan Legislature with
“maintain[ing] and support[ing] a system of free public elementary and
secondary schools as defined by law.” Mich. Const. art. VIII, § 2. The State
Board of Education is vested with “[l]eadership and general supervision over
all public education . . . .” Id. § 3. The State Board of Education further
“serve[s] as the general planning and coordinating body for all public
education . . . and shall advise the legislature as to the financial requirements
in connection therewith.” Id. Separate from any federal funding, Michigan
provides more than $13 billion each year to its approximately 831 LEAs and
56 intermediate school districts. The 3,400 school buildings in these districts
educate almost 1.5 million students each year. While the school districts
exercise primary responsibility over budgetary and other decisions within
their respective districts, the Michigan Department of Education (MDE)
implements federal and state legislative mandates in education and carries out
the policies of the State Board of Education. See Mich. Comp. Laws §
388.1009.
b. California: The State of California is the legal and political entity with plenary
responsibility for educating all California public-school students. California
has the constitutional responsibility to establish and maintain the system of
common schools and a free education. Cal. Const. art. IX, § 5. California
funds and oversees the operation of the largest common system of public
schools in the nation, which serves nearly 6.8 million children in more than
10,500 schools. In 2018–2019, California provided about $56.1 billion in
General Funds to its 1,037 school districts and over 1,200 charter schools.
Under the California Constitution, “[t]he State itself has broad responsibility
to ensure basic educational equality.” Butt v. State of California, 4 Cal. 4th
668, 681 (1992). Emergency conditions causing inequitable conditions may
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create a duty for the State to intervene and provide supplementary support.
See id. at 688. The California State Board of Education makes education
policy determinations, and adopts rules and regulations for the government of
elementary and secondary schools. Cal. Educ. Code §§ 33000, 33030-33031.
The California State Board of Education is responsible for applying for
federal funds made available to state education agencies under federal law, is
responsible for directing the allocation and apportionment of those federal
funds to public schools, and is responsible for adopting implementing rules
and regulations governing those federal funds. Cal. Educ. Code §§ 12000-
12001. The California Superintendent of Public Instruction oversees the
schools within the state and is the executive officer of the California State
Board of Education and the California Department of Education. Cal. Educ.
Code §§ 33112, 33301(b), 33302-33303. The California Department of
Education is a state administrative agency responsible for administering and
enforcing laws related to education throughout California. Cal. Educ. Code
§§ 33300, 33301, 33306, 33308.
c. District of Columbia: The Office of the State Superintendent of Education
(OSSE) is the state education agency for the District of Columbia charged
with raising the quality of education for all DC residents. OSSE serves as the
District’s liaison to the Department and works closely with the District’s
traditional and public charter schools to achieve its key functions. D.C. Code
§ 38-2601. District of Columbia public schools received more than $902
million in state funding last year while charter schools in the District received
more than $904 million. 95,820 students attend either a public or charter
school in the District.
d. Maine: Maine’s state policy on public education is that “[i]t is the intent of the
Legislature that every person within the age limitations prescribed by state
statute shall be provided an opportunity to receive the benefits of a free public
education.” Me. Rev. Stat. tit, 20-A, § 2(1). The Maine Department of
Education is charged with “[s]upervis[ing], guid[ing] and plan[ning] for a
coordinated system of public education for all citizens of the State . . . .” Me.
Rev. Stat., tit. 20-A, § 201(1). The Commissioner of Education is responsible
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for “[p]roviding educational public leadership for the State” and “[e]nforcing
applicable regulatory requirements for school administrative units.” Me. Rev.
Stat., tit. 20-A, § 251-A(1), (3). The Commissioner determines the amount of
state funding for Maine’s school administrative units through the Essential
Programs and Services Funding Act, Me. Rev. Stat., tit. 20-A, § 15670 et seq.
The Commissioner is responsible for the distribution of funds and the
oversight of the federal grants that the Department receives. Separate from
any federal funding, Maine provides more than $ 1.2 billion each year to its
265 school administrative units (including public charter schools) and two
state magnet schools. The 599 school buildings in these school administrative
units educate approximately 175,600 students each year.
e. New Mexico: The New Mexico Constitution promises to establish and
maintain a uniform, free public-school system “sufficient for the education of,
and open to, all the children of school age.” N.M. Const. Art. 12, § 1. In
2020, legislators appropriated $3.468 billion in state funds for public
education from prekindergarten through secondary schools, or 45.5 percent of
total recurring appropriations. In 2019, the definition of “school-age” was
revised to include students through age 22. The Fiscal Year 2021 budget
increased recurring appropriations by $216 million, or 6.6 percent, with
significant additional funding to increase educator compensation, provide
additional services to at-risk students, and provide professional development
and mentorship support for early career teachers.
f. Wisconsin: The Wisconsin Constitution requires the Wisconsin Legislature to
establish district schools which are to be “as nearly uniform as practicable”
and “free and without charge for tuition to all children.” Wis. Const. art. X, §
3. The supervision of public instruction is vested in the Superintendent of
Public Instruction (State Superintendent). The State Superintendent is
charged with the general supervision of public instruction and leads the
Department of Public Instruction (DPI) in implementing policies and
promulgating administrative rules. Wis. Stat. § 15.37; see also, e.g., Wis.
Stat. §§ 115.28(1), (3), (7). Her responsibilities also include accepting and
administering federal funds. Wis. Stat. §§ 115.28(9) and (19). Wisconsin
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school district funding comes from state and federal aids, property taxes, and
local revenue. Wisconsin provides state aids to 443 LEAs, with a combined
total student enrollment of 854,959. In the 2019-2020 school year, DPI
administered approximately $6.1 billion in state support for K-12 public
schools.
111. The CARES Act appropriates funds for the Plaintiff States and their LEAs to support
public K-12 schools through the COVID-19 pandemic. Plaintiff States are facing severe
budgetary cuts due to the economic impact of the pandemic—cuts that the ESSER and GEER
Fund moneys were designed to mitigate. Under the Department’s Rule and the Guidance
Document, public schools in the Plaintiff States will lose a significant portion of the ESSER and
GEER moneys that will be diverted to private schools. This result is inconsistent with the clear
language of the CARES Act, and inequitable because public schools do not qualify for other
CARES Act funding available to private schools. Accordingly, LEAs will look to States to
bridge the gaps in their respective public-school budgets that the ESSER and GEER moneys were
intended to fill.
112. If LEAs in the Plaintiff States follow the Rule’s Option #1 (Title I-schools only
Option) when apportioning CARES Act funds, non-Title I schools across the Plaintiff States
stand to lose significant emergency funding to support their schools, and LEAs stand to lose the
ability to use the funds to maintain operations that are funded on an LEA-wide basis. In addition,
while Title I schools in the Plaintiff States will receive some CARES Act funds under Option #1,
the Rule improperly limits how they can use the funds by effectively prohibiting them from using
such funds for existing costs. Thus, for both Title I and non-Title I schools in the LEAs that
receive CARES Act funds, the effect of the Rule is to stymie the States and LEAs from using the
funds for their intended purpose—to “support and prevent, prepare for, and respond to
coronavirus.” CARES Act § 18001. As a result, the Plaintiff States will be required to allocate
moneys to help these schools weather the budgetary storm created by the pandemic.
113. If LEAs in the Plaintiff States follow the Rule’s Option #2 (Private school enrollment
Option) when apportioning CARES Act funds, the Plaintiff States’ LEAs and public schools will
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lose out on significant amounts of ESSER and GEER moneys, which will be diverted to private
schools for students who would not otherwise qualify for Title I-A equitable services.
a. Michigan: If Michigan’s LEAs are forced to follow Option #2 in the Rule for
apportioning CARES Act funds, an estimated $21,604,648.63 in ESSER
moneys would be diverted from public schools in order to provide equitable
services to all private-school students. If Michigan LEAs distribute the
ESSER moneys in the same manner that Title I-A funds are usually
distributed for equitable services based on low-income private-school
students, as the plain language of the CARES Act requires, then only an
estimated $5,107,921 will be distributed for equitable services to eligible
private-school students. Thus, if the Department’s Rule stands and LEAs
used Option #2 to apportion their CARES Act funds, an estimated total of
$16,496,727.63 in ESSER moneys will be diverted from low-income public
schools to private-school students who are not qualified for Title I-A funds—
7% of the total ESSER moneys that Michigan received. This would amount
to $2,251,130.61 less for Detroit Public School Community District students;
$2,643,213.87 less for Grand Rapids Public Schools students, and
$1,474,676.48 less for Flint Community Schools students.
b. California: If California’s LEAs are forced to follow Option #2 in the Rule for
apportioning CARES Act funds, millions in ESSER and GEER moneys would
be diverted from public schools in order to provide equitable services to all
private-school students. If California’s LEAs distribute the ESSER and
GEER moneys in the same manner that Title I-A funds are usually distributed
for equitable services based on low-income private-school students, as the
plain language of the CARES Act requires, then a considerably smaller
portion of the ESSER and GEER moneys will be distributed for equitable
services to eligible private-school students. Thus, if the Department’s Rule
stands and LEAs used Option #2 to apportion their CARES Act funds,
millions in ESSER and GEER moneys will be diverted from low-income
public schools to private-school students who are not qualified for Title I-A
funds.
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c. District of Columbia: If the District of Columbia Public Schools (DCPS) is
forced to follow Option #2 in the Rule for apportioning CARES Act funds,
approximately $5,404,710.77 in ESSER and GEER moneys would be diverted
from public school funds in order to provide equitable services to all private-
school students. If DCPS distributes the ESSER and GEER moneys in the
same manner that Title I-A funds are usually distributed for equitable services
based on low-income private-school students, as the plain language of the
CARES Act requires, then only $1,550,917 will be distributed for equitable
services to eligible private-school students. Thus, if the Department’s Rule
stands and LEAs used Option #2 to proportion their CARES Act funds, a total
of $3,853,793.77 in ESSER and GEER moneys will be diverted from low-
income public schools to private-school students that are not qualified for
Title I-A funds—8.06% of the total ESSER/GEER moneys that DC received.
d. Maine: If Maine’s LEAs are forced to follow the Department’s Rule and
Guidance, the Maine Department of Education (MDOE) estimates that $2.1
million in ESSER money would be apportioned to provide equitable services
to private-school students. If Maine’s LEAs distribute the ESSER money in
the same manner that Title I-A funds are usually distributed for equitable
services based on low-income private-school students, as the plain language
of the CARES Act requires, then only $248,000 will be distributed for
equitable services to eligible private-school students. Thus, if the
Department’s Rule stands, a total of $1,852,000 in ESSER money will
potentially be diverted from low-income public schools to private-school
students that are not qualified for Title I-A funds—4.25% of the total ESSER
money that Maine received.
e. New Mexico: If New Mexico’s LEAs are forced to follow Option #2 in the
Rule for apportioning CARES Act funds, millions in ESSER and GEER
moneys would be diverted from public school funds in order to provide
equitable services to all private-school students. If New Mexico’s LEAs
distribute the ESSER and GEER moneys in the same manner that Title I-A
funds are usually distributed for equitable services based on low-income
private-school students, as the plain language of the CARES Act requires,
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then a considerably smaller portion of the ESSER and GEER moneys will be
distributed for equitable services to eligible private-school students. Thus, if
the Department’s Rule stands and LEAs used Option #2 to apportion their
CARES Act funds, millions in ESSER and GEER moneys will be diverted
from low-income public schools to private-school students that are not
qualified for Title I-A funds.
f. Wisconsin: If Wisconsin’s LEAs are forced to follow Option #2 in the Rule
for apportioning CARES Act funds, $28,429,916.56 in ESSER and GEER
moneys would be diverted from public school funds in order to provide
equitable services to all private-school students. If Wisconsin LEAs distribute
the ESSER and GEER moneys in the same manner that Title I-A funds are
usually distributed for equitable services based on low-income private-school
students, as the plain language of the CARES Act requires, then only
$24,245,400.92 will be distributed for equitable services to eligible private-
school students. Thus, if the Department’s Rule stands and LEAs used Option
#2 to apportion their CARES Act funds, a total of $4,184,515.64 in ESSER
and GEER moneys will be diverted from low-income public schools to
private-school students that are not qualified for Title I-A funds—
approximately 2% of the total ESSER/GEER moneys that Wisconsin will
distribute to LEAs.
114. In total, if every LEA receiving CARES Act funds in the Plaintiff States uses Option
#2 to apportion CARES Act funds, the Plaintiff States will be required to divert tens of millions
of dollars in CARES Act funding to provide services to private-school students. The States’
public schools were expecting to receive these ESSER and/or GEER moneys.
115. Many LEAs may also have to rework their methodologies for allocating State and
local funds to public schools to accommodate the new funds and ensure that CARES Act dollars
do not result in a violation of the Title I-A supplement, not supplant requirement. This is a result
that was not contemplated by Congress and an administrative cost not taken into account in the
Rule.
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116. On top of the additional funding that each Plaintiff State will be required to expend in
lieu of the CARES Act funds diverted to private school services, the Department’s Guidance
Document and Rule impose significant administrative burdens on SEAs, which have fielded and
will continue to field numerous questions from LEAs about how ESSER and/or GEER Fund
moneys should be apportioned in light of the Department’s Rule, which is particularly confusing
given its clear inconsistency with the CARES Act.
117. The confusion caused by the Department has required the SEAs to divert resources to
drafting and issuing memoranda, letters, and other technical assistance to assist LEAs in
apportioning the moneys.
118. While facing numerous remote learning-related challenges in the throes of the
pandemic, the SEAs are now forced to redirect resources to assist LEAs in addressing the
conflicting requirements generated by the Department’s Rule that misinterprets the Act.
119. In addition, the Department’s Rule imposes strict restrictions on LEAs using Option
#1 to apportion the funds, which will increase costs incurred by the SEAs and LEAs to administer
equitable services and provide necessary oversight and control over funding, as required under
CARES Act Section 18005(b).
120. The additional time and work caused by the Department’s confusing and erroneous
interpretation of Section 18005 of the CARES Act will create a substantial burden on the SEAs.
Since the COVID-19 pandemic enveloped the nation, SEAs, LEAs, and schools in the Plaintiff
States have been working tirelessly to transition to remote learning; secure computers and other
electronic devices to facilitate students’ continued learning; create health and safety plans for
returning to school; and plan for the 2020-2021 school year. The time, money, and effort SEAs
have diverted to assisting LEAs with how to apportion ESSER/GEER moneys for equitable
services for private-school students are directly caused by the Department’s Guidance Document
and the Rule. The Department’s estimate of administrative burden does not adequately capture
the amount of administrative time that will be needed to implement this new Rule.
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121. The Department’s inconsistent interpretations in the Guidance Document and the
Rule have also caused a delay in distributing funds to students and teachers—the intended
beneficiaries of these funds—which is contrary to the purpose of the CARES Act funding.
122. Moreover, the Plaintiff States’ SEAs are required to certify in their ESSER Fund
applications that the SEAs and the LEAs will comply with the equitable service provision of the
CARES Act (§ 18005) and “any other applicable law or regulation.”22
123. Because the Department’s Rule contradicts the CARES Act’s requirements, SEAs
(and LEAs) cannot certify that they will comply both with the CARES Act and the Rule.
124. The Department’s Rule places the SEAs in a position where they would be in breach
of the certification in the Certification and Agreement, subjecting the SEAs to “liability under the
False Claims Act . . . [and the] OMB Guidelines to Agencies on Governmentwide Debarment and
Suspension (Non-procurement).”23 Accordingly, SEAs may face potential legal consequences as
a direct result of the Department’s Rule.
125. The Plaintiff States incurred, and will continue to incur, these financial, legal, and
other harms vis-a-vis their SEAs, and the other state-supported K-12 educational institutions in
the Plaintiff States.
126. The Plaintiff States also have an interest in protecting the health, safety, education,
and well-being of their residents. The Department’s interpretation severely impacts the use of the
emergency ESSER/GEER funds for public-school students affected by the COVID-19 pandemic.
It therefore jeopardizes the education of the Plaintiff States’ nearly ten million public-school
students.
127. Indeed, above and beyond their state constitutional obligations to educate school-aged
children, as set forth above, the States have made it a priority to ensure that vulnerable students
like those who are served by Title I-A receive robust educational opportunities. See, e.g., Cal.
Educ. Code §§ 8801 (Healthy Start Support Services for Children Act), 42920 (educational
22 U.S. Dep’t of Educ., Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund), CFDA Number 84.425D (April 24, 2020), available at https://oese.ed.gov/files/2020/04/ESSERF-Certification-and-Agreement-2.pdf.
23 Id.
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services for foster youth); Wis. Stat. §§ 118.43-44 (Achievement Gap Reduction Program),
121.136 (state aid for high-poverty school districts), 115.28(23) & 115.43-44 (Wisconsin
Educational Opportunity Program). The Rule undermines and frustrates these State policies.
128. Option #2 (Private school enrollment Option) of the Rule harms the States’ interest in
providing educational opportunities for their most vulnerable students by requiring LEAs to
divert moneys away from their public schools to private-school students who are not at-risk and
therefore would not be eligible for equitable services under Title I-A.
129. Even if LEAs in Plaintiff States calculate the proportional share of CARES Act funds
for private-school students under Option #1 in the Rule, public schools in the Plaintiff States that
were intended to receive money under the CARES Act will lose access to these funds. Non-Title
I schools will receive no funds. And Title I schools will not be able to use the CARES Acts to
cover existing, ongoing costs, even if related to the pandemic, as such allocation would lead to a
violation of the LEA’s Title I-A supplanting prohibition.
130. Public school systems depend on state moneys. The CARES Act education
stabilization funding is intended to assist public school systems, including both Title I and non-
Title I schools, to address the numerous issues created by the pandemic. Private-school interests
are addressed through eligibility for other stimulus funding within the CARES Act.
131. Protecting and maintaining public-school education in the Plaintiff States is
imperative to ensuring the long-term success of students. The loss of federal funding for public
schools will have significant, adverse impacts on public-school students. The States have an
interest in ensuring that funds are not diverted from other vital state priorities and programs
providing long-term assistance to public-school students who would otherwise have had access to
a free and quality public education absent the Rule.
132. The Rule will injure the States’ interests by causing significant harm to their
residents, including children and other students who attend K-12 public-school educational
institutions within the States.
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CAUSES OF ACTION
COUNT I Violation of Separation of Powers Principles
133. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set
forth herein.
134. Article I, Section 1 of the U.S. Constitution enumerates that “[a]ll legislative Powers
herein granted shall be vested in . . . Congress.”
135. Article I, Section 8 of the U.S. Constitution vests exclusively in Congress the
spending power to “provide for . . . the general Welfare of the United States.”
136. The executive branch’s authority to act “must stem either from an act of Congress or
from the Constitution itself.” Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585
(1952); see also Clinton v. City of New York, 524 U.S. 417, 438 (1998) (“[N]o provision in the
Constitution . . . authorizes the President to enact, to amend, or to repeal statutes.”).
137. This principle is particularly strong in the spending context, because “[w]hen it comes
to spending, the President has none of his own constitutional powers to rely upon.” California v.
Trump, No. 19-16299, 2020 WL 3480841, at *16 (9th Cir. June 26, 2020) (quoting San
Francisco, 897 F.3d at 1233–34). Thus, “[a]bsent congressional authorization, the
Administration may not redistribute or withhold properly appropriated funds in order to effectuate
its own policy goals.” See San Francisco, 897 F.3d at 1235. Nor may it impose conditions on
funds appropriated by Congress without congressional authorization. See id. at 1233–34.
138. The Department’s Rule and Guidance Document require LEAs to allocate or use
GEER and ESSER funds in a manner that is contrary to the plain language of Section 18005 of
the CARES Act, thereby violating constitutional separation of powers principles by requiring
distribution of funds based on conditions not provided for in the CARES Act. Defendants did not
have inherent authority to change the manner in which LEAs distribute the GEER and ESSER
funds. Nor did Congress afford Defendants any discretion or authority to issue rules governing
the LEAs’ allocation or use of these funds through the CARES Act.
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139. By unilaterally imposing its interpretation of Section 18005 of the CARES Act, the
Department abrogated the significant discretion given to the SEAs and LEAs in the CARES Act
and usurped Congress’ power to legislate in violation of the principles of separation of powers.
140. Absent injunctive and declaratory relief suspending and vacating the Rule and the
Guidance Document, Plaintiff States and their residents will be immediately, continuously, and
irreparably harmed by Defendants’ illegal actions.
COUNT II Ultra Vires Action
141. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set
forth herein.
142. An agency acts ultra vires when it exceeds its statutory authority conferred by
Congress.
143. There is no provision in the CARES Act that imposes the proportional share
calculations, use restrictions, or eligibility requirements in the Rule for CARES Act funds.
Further, Congress has not delegated to Defendants the authority to impose such requirements.
144. Nothing in the CARES Act requires LEAs to calculate the private-school student
share of CARES Act funds using the Section 8501 calculation; prohibits non-Title I schools from
receiving funds; prohibits Title I schools from using CARES Act funds on any of the permissible
uses in the statute; or requires LEAs to provide equitable services to all private-school students.
Moreover, Congress explicitly required that LEAs follow Section 1117 when apportioning
CARES Act funds for equitable services and determining which private students were eligible for
such services. Congress also explicitly listed permitted uses for the CARES Act funds and
permitted both Title I and non-Title I schools to receive and use CARES Act funds.
145. Through the CARES Act, Congress required the Department to issue ESSER funds to
Plaintiff States’ SEAs without conditioning the receipt of funds on Plaintiffs’ agreement to
require LEAs to calculate the proportional share for equitable services with the improper Section
8501 formula, prohibit non-Title I schools from receiving funds, prohibit Title I schools from
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using CARES Acts on any of the permissible uses in the statute, or require LEAs to provide
equitable services to all private-school students.
146. Absent injunctive and declaratory relief suspending and vacating the Rule and the
Guidance Document, Plaintiff States and their residents will be immediately, continuously, and
irreparably harmed by Defendants’ illegal actions.
COUNT III Spending Clause
147. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set
forth herein.
148. Article I, Section 8, Clause 1 of the United States Constitution, also known as the
Spending Clause, states that “Congress shall have Power to lay and collect Taxes, Duties, Imposts
and Excises, to pay the Debts and provide for the common Defense and general Welfare of the
United States[.]”
149. Under the Spending Clause, conditions may not be placed on federal funds that are
(1) so coercive that they compel (rather than encourage) recipients to comply, (2) ambiguous, (3)
retroactive, or (4) unrelated to the federal interest in a particular program. Nat’l Fed’n of Indep.
Bus. v. Sebelius (NFIB), 567 U.S. 519, 575–78 (2012); South Dakota, 483 U.S. at 206–08.
150. To the extent that Congress delegated its authority to the Department to impose its
own requirements on the allocation and use of GEER and ESSER funds (which it has not), the
Department’s Rule and Guidance Document violate the Spending Clause of the U.S. Constitution.
151. The Department’s interpretation of Section 18005 of the CARES Act in the Rule and
Guidance Document violates the relatedness requirement under the Spending Clause because it is
contrary to Congress’s plainly expressed intent in the CARES Act to require SEAs and LEAs to
follow Section 1117 when apportioning CARES Act funds for equitable services and determining
which private-school students were eligible for such services, and to permit specific uses for the
CARES Act funds by both Title I and non-Title I schools.
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152. The Department’s Rule and Guidance Document also violate the “unambiguous”
requirement under the Spending Clause. Congress has not “unambiguously” imposed the
requirement that LEAs calculate and set aside their GEER and ESSER Funds for equitable
services to all private-school students and teachers, provide equitable services to all private-
school students, limit their uses of funds, and limit their distribution of funds to Title I schools
only. See Pennhurst, 451 U.S. at 17 (“[I]f Congress intends to impose a condition on the grant of
federal moneys, it must do so unambiguously.”).
153. In addition, the Department’s interpretation was an improper “post-acceptance”
restriction. Id. at 17, 25. States “cannot knowingly accept conditions of which they are
‘unaware’ or which they are ‘unable to ascertain.’” Arlington Cent. Sch. Dist. Bd. of Educ. v.
Murphy, 548 U.S. 291, 296 (2006) (quoting Pennhurst, 451 U.S. at 17). Accordingly, the
Spending Clause does not permit what the Department has improperly done here through
unauthorized rulemaking: “surprising participating States with post acceptance or ‘retroactive’
conditions” on congressionally appropriated funds. Pennhurst, 451 U.S. at 25; see also NFIB,
567 U.S. at 519.
154. Plaintiff States did not know of the Department’s interpretation at the time they
applied for and received emergency financial aid grants from the GEER and ESSER funds.
Therefore, they were unable to exercise their choice knowingly, cognizant of the consequences of
their participation, and they were surprised with post acceptance or retroactive conditions.
155. Absent injunctive and declaratory relief suspending and vacating the Rule and the
Guidance Document, Plaintiff States and their residents will be immediately, continuously, and
irreparably harmed by Defendants’ illegal actions.
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COUNT IV Violation of the Administrative Procedure Act
(Agency Action in Excess of Statutory Authority, Short of Statutory Right, or Not in Accordance with Law)
156. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set
forth herein.
157. The APA requires that a court hold unlawful and set aside agency action, findings,
and conclusions found to be in excess of statutory authority, short of statutory right, or not in
accordance with law. 5 U.S.C. § 706(2)(A), (C).
158. Congress did not grant the Department authority to interpret or make rules regarding
Section 18005 of the CARES Act. The Department’s Rule and the Guidance Document are
unauthorized by and contrary to Section 18005 of the CARES Act. They therefore are in excess
of statutory authority, short of statutory right, and not in accordance with law.
159. To the extent the Department claims that its Guidance Document is merely an
interpretation contained in a policy statement, agency manual, or enforcement guideline that lacks
the force of law, the Department’s interpretation is entitled to no or only limited deference. The
Guidance Document is not persuasive, nor does it reflect thorough consideration, and is contrary
to the plain language of the statute it purports to interpret. Congress’s intent in the CARES Act is
clear that equitable services are to be provided by LEAs to private-school students and teachers in
the same manner as required under Section 1117 of the ESEA.
160. Absent injunctive and declaratory relief suspending and vacating the Rule and the
Guidance Document, Plaintiff States and their residents will be immediately, continuously, and
irreparably harmed by Defendants’ illegal actions.
COUNT V Violation of the Administrative Procedure Act
(Arbitrary and Capricious Agency Action)
161. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set
forth herein.
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162. The APA requires that a court hold unlawful and set aside agency action, findings,
and conclusions found to be arbitrary, capricious, or an abuse of discretion. 5 U.S.C.
§ 706(2)(A).
163. A rule is arbitrary and capricious if the agency has “relied on factors which Congress
has not intended it to consider, entirely failed to consider an important aspect of the problem,
offered an explanation for its decision that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in view or the product of agency
expertise.” State Farm, 463 U.S. at 43.
164. The Department’s interpretation of Section 18005 of the CARES Act in the Rule and
the Guidance Document is arbitrary and capricious agency action because, among other reasons,
the Department failed to articulate how its position comports with the plain text of Section 18005
of the CARES Act and why it was reversing its own guidance regarding how equitable services
under Section 1117 should be provided, generating an unexplained inconsistency in the
Department’s position of which it appears to be unaware. Further, the Department ignores
important aspects of the problem, and its decision to enact the Rule runs counter to the evidence
before the Department. The Department also took into account factors Congress did not intend it
to consider. Finally, the Department failed to take into account the reliance interests that its
former position generated.
165. Absent injunctive and declaratory relief suspending and vacating the Rule and the
Guidance Document, Plaintiff States and their residents will be immediately, continuously, and
irreparably harmed by Defendants’ illegal actions.
COUNT VI Violation of the Administrative Procedure Act
(Agency Action Without Observance of Procedure Required by Law)
166. Plaintiffs incorporate by reference the foregoing paragraphs of this Complaint as if set
forth herein.
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167. The APA requires that a court hold unlawful and set aside agency action, findings,
and conclusions found to be without observance of procedure required by law. 5 U.S.C.
§ 706(2)(D).
168. The agency must publish a “[g]eneral notice of proposed rulemaking” in the Federal
Register. 5 U.S.C. § 553(b). That notice must describe “either the terms or substance of the
proposed rule or a description of the subjects and issues involved.” 5 U.S.C. § 553(b)(3).
169. The agency must further provide “interested persons” an “opportunity to participate
in the rule making through submission of written data, views, or arguments with or without
opportunity for oral presentation.” 5 U.S.C. § 553(c).
170. The Rule is a legislative rule adopted without complying with the notice and
comment requirements of the APA.
171. The Rule was issued on an interim final basis without good cause.
172. The Department failed to establish good cause to waive the notice and public
procedures required under the APA due to these procedural requirements being impracticable,
unnecessary, or contrary to the public interest. 5 U.S.C. § 553(b).
173. Absent injunctive and declaratory relief suspending and vacating the Rule and the
Guidance Document, Plaintiff States and their residents will be immediately, continuously, and
irreparably harmed by Defendants’ illegal actions.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff States request that this Court enter judgment in their favor and
grant the following relief:
a. Declare the Rule and all versions of the Guidance Document unlawful within the
meaning of 5 U.S.C. § 706(2)(A), (C), & (D);
b. Preliminarily and permanently enjoin the Department and its officers, employees, and
agents from applying and enforcing the Rule or all versions of the Guidance Document;
c. Vacate and set aside the Rule and all versions of the Guidance Document;
d. Award Plaintiffs reasonable costs and expenses, including attorneys’ fees; and
e. Grant such other and further relief as the Court deems just and proper.
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Complaint for Declaratory and Injunctive Relief
Dated: July 7, 2020
Respectfully Submitted,
DANA NESSEL Attorney General of Michigan /s/ Toni L. Harris FADWA A. HAMMOUD Solicitor General TONI L. HARRIS NEIL GIOVANATTI Assistant Attorneys General Attorneys for Plaintiff State of Michigan Appearing pro hac vice (application forthcoming)
XAVIER BECERRA Attorney General of California MICHAEL NEWMAN Senior Assistant Attorney General SARAH E. BELTON Supervising Deputy Attorney General JAMES F. ZAHRADKA II REBEKAH A. FRETZ /s/ Garrett M. Lindsey GARRETT M. LINDSEY Deputy Attorneys General Attorneys for Plaintiff State of California
KARL A. RACINE Attorney General of District of Columbia /s/ Kathleen Konopka KATHLEEN KONOPKA Deputy Attorney General, Public Advocacy Division Attorneys for Plaintiff District of Columbia Appearing pro hac vice (application forthcoming) AARON M. FREY Attorney General of Maine /s/ Sarah A. Forster SARAH A. FORSTER Assistant Attorney General Attorneys for Plaintiff State of Maine Appearing pro hac vice (application forthcoming)
HECTOR BALDERAS New Mexico Attorney General /s/ Cholla Khoury P. CHOLLA KHOURY LISA GIANDOMENICO Assistant Attorneys General Attorneys for Plaintiff State of New Mexico Appearing pro hac vice (application forthcoming) JOSHUA L. KAUL Attorney General of Wisconsin /s/ Hannah S. Jurss HANNAH S. JURSS Assistant Attorney General Attorneys for Plaintiff State of Wisconsin Appearing pro hac vice (application forthcoming)
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ATTESTATION OF SIGNATURES
I, Garrett M. Lindsey, hereby attest, pursuant to Local Civil Rule 5-1(i)(3) of the Northern
District of California that concurrence in the filing of this document has been obtained from each
signatory hereto.
Dated: July 7, 2020
/s/ Garrett M. Lindsey GARRETT M. LINDSEY Deputy Attorney General Attorney for State of California
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